Sham Transaction Doctrine

47 Florida cases classified under this topic · sorted by citation count · browse and sort

• Eli D. Goodstein v. Commissioner OF Internal Revenue
  267 F.2d 127· 1st Cir.· 1959-05-21 ·cited 78×
  The court held that the purported interest payments were not deductible because the underlying transactions lacked economic substance and, alternatively, because the taxpayer, on the cash basis, did not actually pay the interest.
• Rice's Toyota World v. Commissioner OF Internal Revenue
  752 F.2d 89· 4th Cir.· 1985-01-07 ·cited 51×
  The court held that a sale and leaseback transaction was a sham lacking economic substance and business purpose, disallowing depreciation and nonrecourse interest deductions, but allowing recourse interest deductions.
• Kirchman v. Commissioner OF Internal Revenue
  862 F.2d 1486· 11th Cir.· 1989-01-11 ·cited 48×
  Commodity straddle transactions structured solely to generate tax losses and defer gains are shams in substance and the losses are not deductible under I.R.C. § 165(c)(2).
• Kapel Goldstein and Tillie Goldstein v. Commissioner OF Internal Revenue
  364 F.2d 734· 2d Cir.· 1966-07-22 ·cited 48×
  The court held that Section 163(a) of the Internal Revenue Code does not permit a deduction for interest paid or accrued on loan arrangements that lack purpose, substance, or utility apart from their anticipated tax consequences.
• Sochin v. Commissioner OF Internal Revenue
  843 F.2d 351· 9th Cir.· 1988-03-29 ·cited 46×
  The Tax Court should be affirmed because the transaction was a sham and lacked economic substance.
• Golsen v. Commissioner OF Internal Revenue
  445 F.2d 985· 10th Cir.· 1971-06-18 ·cited 38×
  The court held that the "interest" payments made under the insurance plan lacked economic substance and were not deductible as interest on borrowed funds because the transactions were a sham designed solely for tax avoidance.
• DeMARTINO v. Commissioner OF Internal Revenue
  862 F.2d 400· 2d Cir.· 1988-11-23 ·cited 35×
  The court affirmed the Tax Court's decision, holding that the crude oil futures straddle trades were sham transactions and their losses were not deductible. The court also upheld the imposition of a negligence penalty and the retroactive application of a higher interest rate for
• Mahoney v. Commissioner OF Internal Revenue
  808 F.2d 1219· 6th Cir.· 1987-01-14 ·cited 30×
  The court held that the Tax Court's finding that the commodity straddle transactions were a sham was not clearly erroneous, making the claimed tax losses nondeductible.
• Charles W. Balthrope and Mary v. Balthrope
  356 F.2d 28· 5th Cir.· 1966-01-18 ·cited 30×
  The dissenting judge believes the $150,000 payment was part of the stock purchase price, not for a covenant not to compete and consulting services.
• Enrici v. Comm'r Internal Revenue Serv.
  813 F.2d 293· 9th Cir.· 1987-03-26 ·cited 29×
  The court held that losses from forward straddles were not deductible because the transactions were shams, and fees paid for these artificial losses were also nondeductible. The negligence penalty against Easterling was affirmed.
• Fabreeka Prods. Co. v. Commissioner OF Internal Revenue
  294 F.2d 876· 1st Cir.· 1961-10-05 ·cited 28×
  Taxpayers who engage in transactions literally within a statute, even if motivated by tax avoidance, are entitled to deductions if the transactions are not shams and involve actual investment risks.
• Levin v. Commissioner OF Internal Revenue
  832 F.2d 403· 7th Cir.· 1987-10-20 ·cited 26×
  The court held that the partnerships were passive investors and the purported debts lacked economic substance, thus disallowing tax deductions for research expenditures and interest.
• Lewis v. Commissioner OF Internal Revenue
  328 F.2d 634· 7th Cir.· 1964-03-02 ·cited 26×
  The court held that the taxpayers' out-of-pocket expenses and claimed losses from sham securities transactions were not deductible as losses, professional fees, or capital losses because the transactions lacked economic substance and were entered into solely for tax benefits.
• Bridges v. Commissioner OF Internal Revenue
  325 F.2d 180· 4th Cir.· 1963-11-18 ·cited 26×
  The court held that the transactions were shams and the claimed interest payments were not deductible because they lacked economic substance beyond tax reduction.
• Maxwell Rubin v. United States
  304 F.2d 766· 7th Cir.· 1962-06-28 ·cited 26×
  The court held that a purported indebtedness was not valid because the transaction lacked economic substance beyond tax benefits, and therefore, no interest deduction was allowed.
• Neely v. United States
  775 F.2d 1092· 9th Cir.· 1985-11-07 ·cited 24×
  The court held that the Neelys' family trust was a sham transaction, subject to grantor trust provisions, and that they were negligent in pursuing this tax avoidance scheme.
• McNAMARA v. Commissioner OF Internal Revenue
  827 F.2d 168· 7th Cir.· 1987-08-19 ·cited 23×
  The court held that the Tax Court erred in disregarding the stated lease terms based solely on the parties' realistic contemplation of renewal, and remanded for a determination of whether the leases were shams.
• Bail Bonds BY Marvin Nelson, Inc. v. Comm'r OF the Internal Revenue Serv.
  820 F.2d 1543· 9th Cir.· 1987-07-08 ·cited 21×
  The court held that interest deductions for loans used in a scheme to create artificial tax deductions are not allowable, even if the loans themselves appear to create a legal obligation, if the transactions lack economic substance and business purpose.
• Dale K. and Donna L. Sandvall v. Commissioner Internal Revenue
  898 F.2d 455· 5th Cir.· 1990-04-16 ·cited 14×
  The court affirmed the Tax Court's judgments assessing deficiencies and penalties, and also affirmed sanctions imposed for frivolous appeals, finding the taxpayers' arguments lacked legal or factual basis.
• Milbrew, Inc. v. Commissioner OF Internal Revenue
  710 F.2d 1302· 7th Cir.· 1983-07-12 ·cited 14×
  The court held that the Tax Court did not clearly err in finding the sale of the plant a sham transaction, disallowing depreciation and interest deductions based on the inflated sale price.
• Boyter v. Comm'r of Internal Revenue Serv.
  668 F.2d 1382· 4th Cir.· 1981-12-30 ·cited 14×
  The dissenting judge believes the case should be certified to Maryland courts to determine the validity of the divorces under state law before addressing the federal tax implications.
• Haberman Farms, Inc. v. United States
  305 F.2d 787· 8th Cir.· 1962-07-16 ·cited 14×
  The court held that the transactions lacked economic substance beyond tax reduction, rendering the corporate form a sham for tax purposes.
• Kocin v. United States
  187 F.2d 707· 2d Cir.· 1951-03-12 ·cited 14×
  The court held that the partnership served no business purpose and was a sham, thus the Commissioner was justified in charging back sales commissions to the taxpayer's gross income.
• C. P. and Helen Brooke v. United States
  468 F.2d 1155· 9th Cir.· 1972-07-26 ·cited 12×
  The dissenting judge would reverse the majority's decision, arguing it disregards binding precedent and creates an inconsistent tax standard for gift and leaseback transactions.
• Barnett v. Commissioner OF Internal Revenue
  364 F.2d 742· 2d Cir.· 1966-07-22 ·cited 12×
  The court held that a prepaid interest payment was not deductible as interest on indebtedness because the underlying loan transaction lacked economic substance and was a sham.
• James v. Commissioner OF Internal Revenue
  899 F.2d 905· 10th Cir.· 1990-03-26 ·cited 11×
  The court held that the purported sales of computer equipment to the joint ventures lacked economic substance and were shams for tax purposes, disallowing related deductions and credits.
• Gilman v. Commissioner OF Internal Revenue
  933 F.2d 143· 2d Cir.· 1991-05-14 ·cited 10×
  A sale/leaseback transaction lacking both business purpose and economic substance is a sham and will not be respected for federal income tax purposes, justifying disallowance of deductions and imposition of penalties.
• Raymond Pearson Motor Co. & Raymond Pearson, Inc. v. Commissioner OF Internal Revenue
  246 F.2d 509· 5th Cir.· 1957-06-28 ·cited 10×
  The court held that the Commissioner's determination under Section 45 is subject to judicial review and can be set aside if clearly erroneous, even if approved by the Tax Court.
• 58TH ST. Plaza Theatre, Inc. v. Commissioner of Internal Revenue
  195 F.2d 724· 2d Cir.· 1952-03-18 ·cited 10×
  The court held that income derived from a sub-lease lacking a legitimate business purpose, entered into primarily for tax avoidance, is taxable to the corporation and not the individual recipient.
• Maclin P. Davis, Jr. v. Commissioner OF Internal Revenue
  585 F.2d 807· 6th Cir.· 1978-10-27 ·cited 8×
  The court held that the taxpayers could not deduct losses arising from the ownership and operation of apartment buildings because the transfer and management agreements with their corporations were shams lacking economic substance and business purpose.
• Carola W. Rothschild v. The United States
  407 F.2d 404· Ct. Cl.· 1969-02-14 ·cited 8×
  Interest paid on a loan used for an investment transaction that yields no net pre-tax earnings and provides no economic benefit apart from tax deductions is not deductible under I.R.C. § 163(a).
• Twin Oaks Co. v. Commissioner of Internal Revenue
  183 F.2d 385· 9th Cir.· 1950-07-20 ·cited 8×
  The court held that the Tax Court erred in sustaining income tax deficiencies against the corporation, as the formation of the partnership was not a sham without substance.
• Pension Benefit Guar. Corp. v. White Consol. Indus., Inc.
  998 F.2d 1192· 3d Cir.· 1993-06-30 ·cited 7×
  The court held that a transaction does not become effective for purposes of 29 U.S.C. § 1369 until the transferor ceases making substantial contributions to the pension plan, and that a sham transaction claim under § 1362 survives dismissal.
• Commissioner of Internal Revenue v. Page Oil Co.
  129 F.2d 748· 2d Cir.· 1942-07-27 ·cited 6×
  The court held that the subordinate notes constituted an indebtedness, and the accrued interest was deductible for tax purposes.
• Battelstein v. Internal Revenue Serv.
  611 F.2d 1033· 5th Cir.· 1980-02-14 ·cited 5×
  The court held that interest payments made with funds from a subsequent loan from the same lender could be deductible if certain conditions are met, distinguishing this case from those where the transaction lacks economic substance.
• C.D. Hunt, Jr. v. Commissioner OF Internal Revenue
  938 F.2d 466· 4th Cir.· 1991-07-01 ·cited 4×
  The court affirmed the Tax Court's decision, finding the master recording lease program investments to be sham transactions lacking profit motive and economic substance, and upholding the imposition of additional interest.
• Shriver v. Commissioner OF Internal Revenue
  899 F.2d 724· 8th Cir.· 1990-03-28 ·cited 4×
  The court held that a sale and leaseback transaction was a sham for tax purposes because it lacked both economic substance and a subjective business purpose, and therefore the claimed tax deductions were improper.
• Caruth Corp. v. United States
  865 F.2d 644· 5th Cir.· 1989-01-27 ·cited 4×
  The court held that a taxpayer who donates an appreciated income-producing asset, such as preferred stock with a right to an imminent dividend, to charity before the dividend record date does not realize taxable income from that dividend.
• Stearns Magnetic MFG. Co. v. Commissioner of Internal Revenue
  208 F.2d 849· 7th Cir.· 1954-01-07 ·cited 4×
  Royalties paid by a corporation to its sole stockholders for the use of a patent previously transferred to them as a dividend in kind are deductible as ordinary and necessary business expenses, provided the transaction is fair, reasonable, and not a sham.
• Hines v. United States
  912 F.2d 736· 4th Cir.· 1990-09-04 ·cited 2×
  A transaction is a sham for tax purposes if the taxpayer is motivated by no business purpose other than obtaining tax benefits and the transaction has no economic substance because no reasonable possibility of profit exists.
• Fink v. Commissioner OF Internal Revenue
  789 F.2d 427· 6th Cir.· 1986-04-30 ·cited 2×
  A non-pro rata surrender of stock to a corporation by a majority shareholder, made to bolster the corporation's financial health and maintain control, is a non-deductible contribution to capital, not an ordinary loss.
• Terence J. Horn and Jean Horn v. Commissioner OF Internal Revenue
  968 F.2d 1229· D.C. Cir.· 1992-06-26 ·cited 1×
  The court held that section 108(b) of the Tax Reform Act of 1984, as amended, allows commodities dealers to deduct losses incurred in straddle transactions, even if those transactions were primarily tax-motivated and lacked economic substance.
• Donaldson v. United States
  M.D. Fla.· 2021-08-25
  The court held that the defendant's claims of ineffective assistance of counsel, both at trial and on appeal, were meritless and failed to demonstrate deficient performance or prejudice.
• Acker v. AIG Int'l, Inc.
  398 F. Supp. 2d 1239· S.D. Fla.· 2005-11-08
  The court held that the plaintiffs' state law claims did not necessarily raise a substantial disputed federal issue, and therefore, removal to federal court was improper.
• Joseph and Holly H. Coors v. The United States
  572 F.2d 826· Ct. Cl.· 1978-02-22
  Interest payments made on loans secured by life insurance policies are deductible under Section 163(a) if the loan transactions have economic substance beyond the tax deduction.
• M. S. and Geraldine C. LEE v. The United States
  571 F.2d 1180· Ct. Cl.· 1978-02-22
  The court held that interest payments made on loans obtained from Western Security Life Insurance Company during 1966-1969 were deductible, but interest payments on loans obtained during 1962-1965 were not.